Splunk's IPO Shares Nearly Double in Trading Debut

Splunk shares more than doubled in their first day of trading Thursday, but extreme volatility prompted the Nasdaq to halt trading immediately after the shares hit the market. A subsequent error at the NYSE's electronic exchange resulted in a batch of trades being canceled.

The shares were priced at $17 and opened at $32 on the Nasdaq. By afternoon, they were up $16.32, or 96 percent, trading at $33.32, after peaking at $34.72 shortly after their debut.

In a statement, NYSE Arca said that a few seconds after the Nasdaq halted trading, it mistakenly manually reopened the stock for trading. As a result, all of the trades made during the nearly five minutes the stock was supposed to be halted were canceled, NYSE Arca said.

The stock exchange said it has taken steps to prevent that from happening again.

San Francisco-based Splunk's software helps companies collect and analyze massive amounts of internal data. It has more than 3,700 customers in 75 countries including universities, government agencies and service providers, according to a Nasdaq statement.

Splunk says it has never been profitable, but its sales are growing quickly. Revenue jumped 89 percent to $66.2 million in 2011. The company posted a net loss of $3.8 million for the year, compared with a net loss of $7.5 million in 2010.

JMP Securities analyst Greg McDowell initiated coverage of Splunk with a "Market Outperform" rating and a $22 price target, noting that it's one of the fastest-growing companies in its sector and has a rapidly growing customer base. He also pointed to its "excellent" management team and unique business model.

"We expect Splunk's growth rate to remain above 30 percent for at least the next three fiscal years and we believe it could be higher," McDowell wrote in a note to investors.

The company has said in its regulatory filings that it plans to use the offering's proceeds to invest in itself, for general business purposes and possibly to buy other businesses or products.